NVIDIA outbids Intel for major Israeli chip maker

It reportedly won the bidding war for Mellanox by offering about 10% more than its rival

NVIDIA has reportedly made a winning offer to acquire Mellanox, a chip maker best known for its high-performance computing and networking tech. Even though it is not yet publicly confirmed, financial news outlet Calcalist and Reuters announced that NVIDIA outbid its main rival Intel by offering more than $7bn - well past the $6bn Intel decided to pay a few months ago. These offers come after Mellanox essentially offered itself for sale in October 2018, which reportedly also garnered attention from Microsoft and Xilinx.

While the exact reasons for a potential deal aren't clear, NVIDIA would have more than a few incentives to acquire the Israeli chipmaker. Most importantly, NVIDIA's play at Mellanox would help the company diversify into networking, thus reducing its heavy reliance upon graphics cards sales that has seen the company suffer at the whims of the cryptocurrency market. Their joint work could be, for example, most helpful for servers, supercomputers and other situations where you need many processors working in tandem. At the same time, it could also be useful for self-driving cars (where multiple processors may have to coordinate actions), or even ensuring fast connections between multiple GPUs in workstations and gaming PCs.

Mellanox would also fold into Intel's portfolio nicely. Intel has spent several years transitioning away from being a PC-centric business to other profitable climes, such as data storage, memory, IoT, and 5G. Intel's overall goal is to leverage its commanding presence in the data center, estimated at ~95% of the worlds server sockets, to expand into these new adjacencies quickly. And Mellanox's portfolio seems a natural fit for this.

Yet, only time will tell if Intel will dig into its significantly deeper pockets to push NVIDIA out of the running, or if another large player, like Microsoft, can steal the networking show.

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